Commoditization

Many entrepreneurs respond by giving away advice and creating a great, personalized experience for their clients and customers for free.

Commoditization, characterized by decreasing profits and increasing competition is a fact of life in most industries today for a number of reasons. Products are less and less differentiated in the eyes of buyers. At the same time, it’s easier to shop around than ever before.

The hope is that this will allow them to sell more commodities. The trouble is that what is free often tends to be taken for granted, and after making a significant investment, you can still lose sales to bigger players who can offer similar products and services at a deeply discounted price.

Why do your best clients and customers do business with you instead of a competitor? Chances are, it’s not because of the commoditized product or service you sell, but because they get some unique value in the process of dealing with you, whether it’s in the form of confidence you provide, a unique level of relationship and service, or direction you give them that they don’t get elsewhere. The way to escape from commoditization is to charge directly for this value (and for the commodity too!) If you think it can’t be done in your industry, think again. Our experience has been that even when entrepreneurs have been most skeptical, clients and customers are willing to pay to get what they value most when it is well-packaged and presented.